Cabinet has concluded that South Africa should refrain from entering into Bilateral Investment Treaties (BITs) in future, except in cases of compelling economic and political circumstances. This was announced by the Minister of Trade and Industry, Dr Rob Davies. He was speaking at the launch of the South African United Nations Conference on Trade and Development (UNCTAD) Investment Policy Framework for Sustainable Development (IPFSD) that was held at Wits University.
‘Cabinet instructed that all “first generation” BITs which South Africa signed shortly after the democratic transition in 1994, many of which have now reached their termination date, should be reviewed with a view to termination, and possible renegotiation on the basis of a new Model BIT to be developed’
Davies said that this is in line with a three-year Bilateral Investment Treaties (BITs) review that was concluded in 2010. According to him, Cabinet understood that the relationship between BITs and Foreign Direct Investment (FDI) was ambiguous at best, and that BITs pose risks and limitations on the ability of the Government to pursue its Constitutional-based transformation agenda.
The Minister added that Cabinet further decided that South Africa should strengthen its domestic legislation in respect of the protection offered to foreign investors by, amongst other things, codifying typical BIT-provisions into domestic law. He stated that Cabinet has elevated all decision-making in respect of BITs to an Inter-Ministerial Committee tasked with oversight of investment, international relations and economic development matters.
‘Key considerations would be to codify BIT-type protection into South African law and clarify their meaning in line with the South African Constitution. We would also seek to incorporate legitimate exceptions to investor protection where warranted by public policy considerations such as, for example for national security, health, environmental reasons or for measures to address historical injustice and or promote development’, he said.
Minister Davies stated that South Africa’s updated approach would aim to achieve an appropriate balance between the rights and obligations of investors and the need to provide adequate protection to foreign investors. He said the will also ensure that constitutional obligations are upheld, and that government retains the policy space to regulate in the public interest.
‘This corresponds in large measure to emerging thinking at the global level. A new generation of investment policies has emerged, with governments pursuing a broader and more intricate development policy agenda within a framework that seeks to maintain a favourable investment climate. New generation investment policies now place inclusive growth and sustainable development at the centre of efforts to attract and benefit from investment’ declared Davies.
Minister Davies indicated that the Investment Policy Framework for Sustainable Development that he launched today offers a strong point of departure for international cooperation in the area of international investment policy-making within a universally-accepted human rights framework.
UNCTAD’s Investment Policy Framework for Sustainable Development (IPFSD) is a guideline for national and international investment policymaking to support more sustainable development-friendly investment policy making. It is conceived to assist policymakers design policies that effectively mobilise investment and ensure its positive contribution to sustainable development.
Enquiries:
Sidwell Medupe, Departmental Spokesperson
Cell: 079 492 1774
Tel: 012 394 1650
E-mail: MSMedupe@thedti.gov.za
